The New Zealand dollar weakened as investors bet positive US data increases the chances the Federal Reserve will taper its monetary stimulus soon, bolstering the greenback.
The kiwi slipped to 81.24 US cents at 8am in Wellington, from 81.92 cents at the 5pm market close yesterday. The trade-weighted index fell to 76.50 from 76.94.
A report out of the US showed jobless claims fell, providing optimism about a resilient labour market ahead of the key non-farm payrolls report next Friday, which is closely watched by the Fed. Adding to optimism, a purchasing managers' survey beat expectations, a consumer confidence measure was revised upwards and a measure of future economic growth rose to a nine-week high. Still, other reports showed factory investment demand remains soft as business spending on capital goods weakened and new orders for long-lasting manufactured goods fell.
"The US data overnight was strong enough to keep the US dollar bulls in ascendancy but not so strong to make their case clear," said Sam Tuck, senior manager FX at ANZ New Zealand.
Volume was light ahead of the Thanksgiving Day holiday in the US today, during which financial markets will be closed.
"We saw continued large flows into both the UK and Europe and out of Australian dollars and New Zealand dollars," Tuck said. "As the world becomes more normal, people who were underweight Europe, the UK and the US and overweight Asia-Pacific and the emerging economies are reducing their overweight position slowly but surely. It is a definitive trend."
The New Zealand dollar slipped to 89.53 Australian cents from 89.76 cents yesterday ahead of a report today on third quarter private capital expenditure which will be closely watched for signs of a pickup in non-mining investment. Strength would likely cap the kiwi/Aussie cross rate, Tuck said.
The kiwi edged lower to 82.96 yen from 83.10 yen yesterday. The local currency fell to 59.87 euro cents from 60.27 cents yesterday after a report showed German consumer sentiment at a six-year high.
The New Zealand dollar slipped to 49.93 British pence from 50.50 pence yesterday ahead of a British financial stability report today, to be followed by a press conference by Bank of England governor Mark Carney.
In New Zealand today, traders will be eyeing the ANZ business confidence survey which is expected to point to continued optimism in the local economy.
Also on the radar today, New Zealand's Reserve Bank releases information showing its currency flows for last month.